PIERRE, S.D. (Todd Epp / South Dakota Broadcasters Association) – The South Dakota Legislature is four days into its 2026 session, but an early deadlock over economic development policy has already exposed a growing divide between lawmakers and the governor’s office over who should control high-dollar investment decisions.
At issue is who sets the rules for the state’s Future Fund — lawmakers through statute, or the governor through executive authority. The question affects how quickly the state can act, how much oversight lawmakers have, and who is ultimately accountable for major economic development decisions.
COMMITTEE DEADLOCK
That divide surfaced Friday in the Senate State Affairs Committee, where lawmakers split 4–4 on Senate Bill 1. The tie vote stalled the bill, and the committee chair deferred it for possible future consideration.
SB 1 would require the Governor’s Office of Economic Development to adopt formal rules for awarding Future Fund dollars. The bill lays out standards for applications, project selection, economic-impact analysis, interest rates, and the distribution of loans and grants.
Supporters say the bill would codify existing practices and give lawmakers clearer oversight of the state’s most powerful economic development tool. Opponents argue the additional requirements could slow the state’s ability to compete with other states for large business investments.
Before voting on the bill, the committee adopted an amendment removing a provision that would have capped loan interest rates at no more than 2 percentage points above a key Federal Reserve interest rate. Even with that change, the committee remained evenly divided.
EXECUTIVE ORDER ON EVE OF HEARING
The committee vote came one day after Gov. Larry Rhoden issued an executive order outlining new internal requirements for the Future Fund. The order calls for written grant agreements, reimbursement-based payments, and expanded reporting to the Legislature.
Several legislators testified in favor of the bill, including Reps. Marty Overweg, Julie Auch, Erik Muckey, and Eric Emery, along with Sen. Red Dawn Foster.
ARGUMENTS OVER FLEXIBILITY VS. ACCOUNTABILITY
Opponents emphasized flexibility. Sen. Steve Kolbeck said, in remarks reported by The Dakota Scout, that adding statutory layers could slow decision-making when the state needs to move quickly to secure investment.
At the Thursday press conference announcing the executive order, Lt. Gov. Tony Venhuizen said placing authority in the governor’s office provides clearer accountability. He argued that when decisions rest with the governor, responsibility for outcomes is easier to identify.
SMOOTH OPENING WEEK OTHERWISE
The deadlock stood out during an otherwise smooth opening week. At the same Senate State Affairs meeting, lawmakers unanimously advanced three unrelated bills on ballot question disclosure and administrative rulemaking, sending them to the consent calendar without debate.
Most other committees reported light agendas and lopsided votes. One exception came in the Senate Judiciary Committee, where Hailey Baker, a citizen testifying against a prison drug-ingestion bill, faced extended questioning from lawmakers.
Taken together, the week produced few major outcomes but sent an early signal: while most legislation is moving quickly, proposals affecting the Future Fund and economic development authority are likely to face closer scrutiny as the session continues.
